Japan-China Relations 2005–2010: Managing Between a Rock and a Hard Place An Interpretative Essay

Executive Summary

Between China and Japan, the past is ever-present. Notwithstanding shared cultural and historic ties, throughout the past century and going back to the Sino-Japanese war at the end of the 19th century, a bitter legacy of history—the Boxer Rebellion; the Mukden Incident and Japan’s occupation of South Manchuria (1931); the Marco Polo Bridge Incident, Japan’s subsequent invasion of China, and the Nanjing Massacre (1937); and the Sino-Japanese War (1937– 1945)—has left an indelible mark on this relationship.

Nevertheless, the two countries have demonstrated the ability to put history on the back burner in order to address immediate needs. Diplomatic relations were normalized in 1972 and a Treaty of Peace and Friendship, committing the two countries to economic and political cooperation, was signed in 1978. Japan’s Official Development Assistance programs and low interest yen loans contributed to the success of China’s market opening reforms initiated by Deng Xiaoping.

This study examines the metafactors shaping the China-Japan relationship: the rise of China, a competition for regional leadership within a shifting balance of power, and history. At the strategic level, there is intense, but quiet, political competition for the mantle of leadership in the Asia-Pacific region. With memories of history suffusing critical aspects of the relationship, managing and adjusting to China’s growing influence and successfully managing relations will challenge political leadership both in Beijing and in Tokyo.

There are also several macro-structural factors that shape the China-Japan relationship. They begin with the critically important economic relationship. In 2006, China became Japan’s top trading partner, and in 2007 China became Japan’s top export market, in both instances replacing the United States. Within Japan’s business community, the China boom is widely recognized as the driving force behind Japan’s recovery from its “lost decade” in the 1990s. The increasing integration of the two economies provides ballast to a bilateral relationship that is also marked by a number of combustible political issues including conflicting territorial claims, a disputed maritime boundary in the East China Sea, and security anxieties in both countries. As a result, there is a dynamic and shifting tension among economic, political, and security interests. In both countries, these elements add inherent volatility to the bilateral relationship within which day-to-day problems are addressed.

Finally, this study considers a number of case studies focused on the day-to-day challenge of managing issues that, if left unaddressed, could harm significant national interests on both sides of the bilateral relationship and complicate realization of the benefits of a “Mutually Beneficial Relationship based on Common Strategic Interests.” Day-to-day issues such as the East China Sea, food safety, history, and security may not lend themselves to resolution in the short- to midterm, but finding ways to deal with or work around the issues is critical to keep the relationship more or less on an even keel and moving forward. At the same time, highly nationalistic, zero-sum issues relating to sovereignty, such as the September 2010 Senkaku incident, have the potential to derail the relationship at significant cost to both parties. Across the board, issues must be managed with utmost care if Sino-Japanese relations are to reach their full potential.